Opinion & Analysis
How customs union can boost trade
From left: President Amani Abeid Karume of Zanzibar, President Kibaki, Rwanda President Paul Kagame and Deputy Prime Minister of Uganda, Eriya Kategaya, during the East African Community Investment Conference in Nairobi. A fully fledged customs union is bound to continue to bear more fruits. Photo/FILE
Posted Wednesday, October 21 2009 at 00:00
The integration of the East African Community aims at closer ties among the partner states through coordination of the implementation of policies, projects and programmes in such areas as political, economic, social and cultural fields for the benefit of the people of East Africa.
Overall, there are 17 areas of cooperation identified in the EAC Treaty.
The step towards a full integration are a customs union, a common market, a monetary union and ultimately a political federation.
The customs union protocol was signed in 2004 and commenced in January 2005 and is to become fully fledged in 2010.
Next year will also see the common market protocol begin.
The aim of this article is to try and shed light on the applications of four key aspects of the customs union, namely the elimination of internal tariff and its impact on trade, elimination of non-tariff barriers (NTBs), and application of the rules of origin and common external tariff.
Significant progress has been made in the implementation of the customs union protocol, resulting in huge increases in the volume of intra-EAC trade since 2005.
On the surface, elimination of internal tariff appeared to favour the other partner states and disadvantaged Kenya, whose exports of some categories of goods to the other partners continued to attract tariffs, did not adversely affect her exports to the EAC.
In real terms, however, all countries of the region have benefited.
In 2008, for example, Uganda was Kenya’s number one export destination, Tanzania was fourth and Rwanda tenth, worldwide and in the same year, Kenya’s exports to the EAC have accounted for 51.6 per cent of exports to Africa.
Kenya’s value of total exports to the four Partner States increased from Sh64 billion to Sh84 billion in 2004 and 2008 respectively.
Uganda is the largest Kenya’s export market followed by Tanzania, accounting for 50 per cent and 11 per cent respectively.
Kenya’s import from the region increased from Sh3 billion to Sh12.6 billion in 2004 and 2008 respectively.
The largest importer to Kenya is Tanzania accounting 58 per cent for all imports from EAC.
Overall, total value exports from Kenya grew by 31 per cent while imports from Tanzania and Uganda grew by 300 per cent.
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